Setting a budget isn’t fun and it isn’t glamorous, but it is critical to starting your home remodel off on the right foot. If you have no idea where to start when it comes to budgeting, don’t fret. It’s not as difficult as you might think, and we've got some tips to help you get started!
Figure Out What You Want
“Why do I want to remodel in the first place?” Start your budget creation process with this simple, yet crucial question and figure out what issues you have with your home as it currently is. These concerns will help you figure out exactly what you want to accomplish with your remodel. If your complaint is that you didn’t have enough kitchen space for holiday hosting, for example, then you know your remodel needs to expand your kitchen space.
You should also take into account what kind of materials and finishes you want. Do you want to go all out with high-end selections or opt for a budget-focused remodel that enables you to spend more in other areas of your home? Create a detailed document listing your pain points with corresponding home remodeling solutions and the materials you want to use. Your list will be a useful reference when you seek out price estimates and it can be a helpful tool in prioritizing where you allocate your project funds. Here are our suggestions as to the most important things to consider when curating your list:
Know Your Finances
Now that you know what you want, the next order of business is figuring out how you’re going to pay for it. Do you have savings set aside for projects such as this? Or are you going to need some assistance to fund your renovation? Start by figuring out how much money you have in savings and liquid investments; how much equity you have in your home; how much you’re willing to borrow, etc. Once you have a full picture of your financials, it’s time to start looking at your financing options. Find a lender near you and ask about financing your remodel with cash-out refinancing, a home construction loan, HELOC loan, home equity loan, or the like.
Search For Estimates
The next step is getting price estimates. Start by searching for price guides and well-respected home remodeling websites — these resources will give you a general idea of how much your remodel should cost. And since region can have a big influence on price, check out locational resources like Remodeling Magazine’s Cost vs Value report, which provides cost estimates for various remodeling projects based on region. In addition to referencing local price guides, search for resources that can aid you in creating a budget. If you’re working on a Portland kitchen remodeling budget, for example, search for a kitchen remodel budget spreadsheet; once you find one, you can use the price guide estimates in addition to your list of materials and renovations (from step one) to fill it out.
It’s also a good idea to seek price estimates from multiple remodelers. Industry professionals will be able to listen to your remodeling ideas and give you information on what you’ll need to do to achieve your vision. They can also give you a heads-up about costs that you may not anticipate. Most home contractors will give you a free estimate, though you’ll likely need to pay for a detailed quote with cost specifics.
Factor in ROI
A remodel can be a huge investment, so before you make any decisions you need to think long-term. Are you planning to stay in your home for the next 20 years? Or do you think you’ll need to downsize a few years down the road? Either way, how you remodel today will have ramifications on your home value whenever you decide to sell. That’s why you need to factor in return on investment. ROI compares the cost of a home project with the resale price to determine how much of your investment you’ll make back.
Take a midrange bathroom remodel for example. The Cost vs Value report estimates that midrange bathroom remodel financing in Portland costs an average of $24,383 with a resale value of $16,630; thus, yielding a 68.2% ROI. ROI can help you make informed decisions about where you want to invest money in your remodel. Plus, it’s a great tool for comparing costs and benefits to help you decide which projects you will include in your remodel.
Prepare for the Unexpected
By this point, you should have a clear idea of what your remodel’s planned cost is. But what about unplanned costs? They’re bound to happen, so make sure you set aside money in your budget for unexpected expenses. There’s no hard number that can tell you exactly how much to set aside, but the general recommendation ranges somewhere between five and 25 percent of your overall renovation budget.
Do you need a cost estimate for your home remodel in Portland, Oregon? Are you looking for a professional design-build company? At COOPER Design Build, we can help you with both! Check out our design build process to learn more about the remodel order of operations and visit our services to see if we’re the right fit for your project.
